Ed Balls will today attack the government’s choices on tax, saying that under the Tories “millions pay more while millionaires pay less.”

And he will warn that the Conservatives will raise VAT again – a £1440 tax hike on families over four years – while planning another top-rate tax cut for millionaires.

In a speech in Yorkshire today (Monday) at the start of the new tax year, Labour’s Shadow Chancellor Ed Balls will say that George Osborne’s plans for deeper spending cuts in the next three years and £10 billion of unfunded commitments mean another Tory VAT rise is inevitable.

£10 billion is the equivalent of a two per cent rise in VAT. The Treasury’s own figures show this would mean a tax rise of £360 a year for a couple with children – a VAT rise of £1440 over four years.

Ed Balls will unveil the second of Labour’s campaign posters on this Government’s choices on tax, as he highlights figures from the Institute for Fiscal Studies showing families are on average £1100 a year worse off because of this government’s tax and benefit decisions – including changes which come into effect today.

And he will say that because all of Labour’s manifesto commitments are fully funded and paid for, Labour’s manifesto will include pledges not to raise VAT, national insurance or the basic and higher rates of income tax.

In his speech, Ed Balls will say:

“David Cameron and George Osborne are going round the country telling people they’ve never had it so good. How out of touch can they get? The truth is millions are worse off because of this government’s choices.

“Families and pensioners are paying more because of the VAT rise – David Cameron’s first broken promise. And millions of working people have had their tax credits and childcare support cut to. It’s the same old story with the Tories – give with one hand, take much more away with the other hand.

“Families are £1100 a year worse off on average – the true cost of this Tory Chancellor, as our poster shows. These are independent figures from the Institute for Fiscal Studies, which take into account all of the changes introduced by David Cameron’s government from May 2010 to today – including the changes to the personal allowance.

“And while millions are paying more, millionaires are paying less. Two years ago today they gave the top one per cent of earners in our country a £3 billion a year tax cut. For someone with an income of £1 million that’s a tax cut of £85,000 over the last two years.

“David Cameron and George Osborne ditched the idea that we are ‘all in this together’ and looked after their friends first. Cutting the top rate of tax for the very highest earners, while raising VAT on families. It’s the Tory way: millions pay more, millionaires pay less.”

Looking ahead to Tory plans for the next Parliament, Ed Balls will say:

“And let’s look at what another five years of the Tories will bring. Only yesterday George Osborne repeatedly refused to rule out cutting the top rate of tax again for the very richest.

“We know this is their secret plan – another big tax cut for millionaires. How can this be fair when working people across the country are still struggling? How can this be fair when our NHS is in crisis? And how can this be fair when we still need to get the deficit down and the Tories are planning deeper cuts in the next three years than the last five years?

“And while millionaires will pay less, we also know millions will end up paying more. In last month’s Budget the Tories confirmed plans which go beyond simply balancing the books.

“Plans for extreme spending cuts which are a grave threat to our living standards and our public services. They mean deeper spending cuts in the next three years than the last five years.

“And the Tories have made £10 billion of unfunded tax promises – which they have still not told us how they will pay for. That’s why people will conclude that to make their sums add up the Tories will end up putting our NHS at risk and raising VAT again.

“The Tories have broken their promises on VAT again and again and again. And that’s why people will never trust the Tories on VAT again. Because rather than asking those with the broadest shoulders to make a greater contribution, VAT has always been the Tory tax of choice

“£10 billion is the equivalent of a two per cent rise in VAT. The Treasury’s own figures show this would mean a tax rise of £360 a year for a couple with children – a VAT rise of £1440 over four years.

“Tory governments always raise VAT. They did it last time and if they’re given another chance they’ll do it again – hitting millions of pensioners and working families. It’s the Tory way: millions pay more, millionaires pay less.”

Setting out Labour’s approach, Ed Balls will say:

“But it doesn’t have to be like this. We need a better plan. Millions of working people are paying more under this government.

“So our manifesto will make clear commitments to the British people. We will not raise VAT. We will not raise national insurance. And we will not raise the basic or higher rates of income tax.

“And Labour can make these manifesto commitments for the next Parliament because, unlike the Tories, all of our promises are fully funded and paid for.
“A mansion tax on properties over £2 million, a levy on the tobacco companies and closing tax loopholes to save and transform our NHS with an extra 20,000 nurses, 8,000 more GPs and cancer tests guaranteed in a week.
“Reversing the top rate tax cut – the Tory tax giveaway for millionaires - to help get the deficit down in a fairer way.

“And cutting taxes for millions of working people on middle and low incomes with a lower 10p starting rate of tax – paid for by scrapping the unfair and perverse marriage tax allowance. Our plan will help more married couples, more women, more families and more working people.

“None of our manifesto commitments will need a penny of additional borrowing. Not a single one.

“The choice at this general election is clear. A choice between a Conservative Party which has a track record of breaking their promises on VAT and will raise it again after the election – or a Labour Party which has never raised VAT and will not raise VAT.

“A Tory way which means millions pay more while millionaires pay less, or Labour’s plan to back millions of working people, save our NHS and balance the books in a fair way. A Labour plan which backs the many, or the same old Tories always standing up for the few.”

Ends